Viet Nam stock market remains extremely attractive: experts

With its strong economic growth, attractive valuations and high expected earnings growth for listed firms, Viet Nam’s stock market is attractive now and has good prospects, according to experts.

 

Dr Can Van Luc, a member of the National Financial and Monetary Policy Advisory Council, said despite uncertainties in the global economic context, Viet Nam’s 2022 GDP growth is forecast at 7-7.5 per cent, mainly driven by an increase in exports, foreign investment, domestic consumption, and the Government’s socio-economic recovery and development programmes including stepping up of public spending.

The economy is forecast to grow at 6.5-7 per cent in 2023 and 6 per cent in 2024-30, among the highest in the region, he told a seminar titled ‘Cash flow’ organised by Manulife Investment Management (Vietnam) in HCM City last week.

Foreign investors, especially in high-tech manufacturing, have shifted their production to or expanded investment in the country, which would continue to propel Viet Nam’s economic growth for years to come, he said.

“Inflation this year is expected to be below 4 per cent,” Luc said.

Earnings of listed companies are expected to grow at 20-25 per cent this year and the Government has made efforts to make the capital market healthier, safer and more efficient, also factors making the stock market attractive, he said.

The Vietnamese market’s P/E ratio is at its lowest level in the last five years, which is appealing to long-term investors, who are looking for enterprises with high profit growth.

These are among factors supporting the recovery of the stock market, he said.

"Viet Nam is a rare market in the region at this time in that foreign investors are still buyers, which partly reflects the attractiveness of stocks compared to other asset classes."

He said four factors are attracting foreign investors: the country’s stable polity, solid economic recovery, great international integration with 16 free trade agreements signed and deep involvement in the global supply chain, and young and abundant human resources.

Nguyen Duc Hai, senior investment director, head of fixed income at Manulife Investment Management (Vietnam), when asked how the increase in interest rates would affect the investment environment, said: “When interest rates increase, the opportunity cost of investment also increases, and investors have to consider carefully when investing in risky channels.

“On the business side, rising interest rates increase the cost of capital, reducing profits, forcing businesses to consider carefully when they want to expand production and business. Overall, a high interest rate environment will purge the market and only highly efficient businesses will survive and develop.”

Tran Thi Kim Cuong, CEO of Manulife Investment Management (Vietnam), said the Vietnamese economy would grow strongly for the next 15-20 years and companies would benefit from this high growth.

So investors should invest in good companies, and their assets would grow accordingly. There are also mutual funds through which, with a limited amount of money, they could invest in a portfolio of 30-40 leading companies and have experts manage their investments, she said.

Tuan said industrial real estate, power, water, infrastructure, logistics, wholesale and retail, tourism, and aviation are among the sectors expected to achieve good growth.

Luc tipped the digital economy, green finance, renewable energy, green real estate, and agricultural processing to have big growth prospects in the long run. 

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